Posted by Ed Garcia on February 24, 2001 at 01:08:54:
I’m glad that your attitude has taken a change for the better. It’s refreshing, and I want to thank you for the credit you’ve given me. Now I have to settle you down a little. I know that right about now you’re like a kid in a candy shop.
There is so much candy, you don’t know where to start. Let me give you your first piece of advice, CONTROL. I want you to take control of your deal, but first I want you to take control of yourself. I’m sure you would like to have them all, but for now I want you to not be distracted by the number of properties, but to choose the best one and focus on getting the deal down. How you are going to choose this property is based on,
(2) Motivation of the seller.
(3) Your ability to do the deal.
Now you’re already working with a mortgage broker who has told you that you can do a deal NOO at 90% LTV and if he hasn’t told you, with your credit score, you can do an OO at 100%. There is one more thing he hasn’t told you, and that is if you can get the seller to carry-back, you can do the deal NOO with sub-prime financing and just 5% of your own money down. So it’s important that you work closely with your broker.
Unfortunately, we don’t know enough about the inventory of properties that you’ve come across. For example you’ve mention 7 houses that can be acquired for $84,000. But we don’t know the value of these properties, if they are rented or vacant, the condition, and if they are in poor condition, what it will take to bring them up to market value, etc.
I need you to take this treasure that you’ve come across and learn how to break it down and analyze it piece by piece. I’m afraid with your limited experience and no real money, you’re not going to be able to structure this deal and close it. The lender will see that you don’t have the experience or ability to tackle this portfolio. However, I don’t see a problem in you convincing them to sell you at least one piece of property.
Who is going to be instrumental in you being able to convince them to work with you is your Mortgage Broker. Once he gives you a pre-qual letter, and helps you structure your first deal.
Cherry, I can’t tell you how important it’s going to be for you to do your first deal, because it will be a confidence builder and give you creditability with your mortgage broker and others that you will be doing business with.
Cherry, my plate is full because I’m working with students from my workshop and have to get ready to speak at the Creonline convention that is coming up, not counting other business and commitments that I have made. Otherwise it would fun to help you do your first deal. I’m still going to give you a hand. Here’s what information you’ll need in order to pick your best candidate.
(1) Each individual property market value?
(2) Each individual property loan amount?
(3) Condition, is there any differed maintenance on each property?
(4) If there is differed maintenance on a property, what will it cost to bring it up to market value?
(5) What are market rents on each property?
(6) What are current rents on each property?
(7) Will the seller carry paper and how much on each property?
(8) Is any of the existing financing assumable? Cherry this is IMPORTANT. You’ve just told me that the existing lender had done a blanket lien on several properties. If given a good borrower, they may entertain allowing a loan assumption or refinancing the property completely.
Cherry, as these questions get answered, things will start to happen. Based on the findings of this information, you’ll begin to formulate which property you’ll need to take action on, and make an offer on that property that will make sense for you.
Cherry, this is only the beginning, I hope this post will be helpful in giving you some direction.